MGM Energy Corp.
, Stock Forum
) said Tuesday it has received a $50 million proposal from Paramount Resources Ltd.
, Stock Forum
) that would result in Paramount purchasing all of the MGM shares not currently owned by Paramount.
Paramount currently owns 54.1 million MGM common shares or 13.9% of the issued and outstanding shares.
Clayton Riddell, CEO of both Paramount and MGM Energy, currently owns 122.8 million shares of MGM Energy or 31.6% of the outstanding shares.
Riddell has indicated to Paramount that he would support this transaction as it relates to his holdings in MGM Energy common shares, MGM said in a press release.
MGM Energy shares fell 22.5% to 15.5 cents on Tuesday, leaving a market cap of $62.2 million, based on 388.8 million shares outstanding. The 52-week range is 35 cents and 4 cents. Paramount eased 1.1% to $45.
MGM Energy is a Canadian oil and natural gas exploration and development company active in Northern Canada.
News of the offer comes after MGM failed to find a partner to help finance a shale oil prospect in the Northwest Territories.
Under the proposal, all shareholders of MGM Energy would receive on Class A common share of Paramount for every 300 common shares of MGM Energy. Based on the current trading price of Paramount common shares on the TSX of approximately $45 per share, this represents $0.15 per MGM Energy common share.